Article

Share

Categories

Is online grocery shopping delivering the goods?

Having never really been a huge advocate of on-line grocery shopping over physical human purchasing behaviour (I like to see what I’m buying – feel it, smell it), I find myself slowly becoming one of the statistics as the user experience and delivery of service generally lives up to expectations.

Having a large busy family, and running a growing group of businesses, the pros of convenience and spending your scarce and precious free-time doing something other than walking the isles really rings true.

What’s interesting, as with many largely traditional human behaviour patterns, is that as the Internet and retail community evolve, more and more people are starting to become pure-play evangelists; or at least think of it as a key aspect of their general leisure shopping activities. The ‘bricks-n-clicks’ model widely acknowledged as the future of retailing 10 years ago has certainly become the norm (even the local sweet shop has an e-commerce site these days) and the pure-play operators seem to have also learnt many lessons now largely fulfilling the all important brand promise of delivery.

That said, and even though the sector has enjoyed phenomenal growth over the past few years, new research has revealed many people in the UK are yet to click with online grocery shopping echoing the above.

The UK online grocery market is estimated at £4.4 billion (including sales tax and delivery charges) in 2009, having more than doubled (134% growth) in value over 2005-09. Rapidly rising food inflation, particularly in 2008, has contributed to high value growth in the sector, while dampening demand in volume terms.

However, the underlying growth has been pretty explosive. On the consumer side, rising broadband penetration and higher connection speeds, together with the steady expansion of the online grocers’ geographical coverage, has made the service accessible to more people. Meanwhile, the improvements to the online grocers’ services and rising web fluency (you are forced to do even the most basic domestic admin via a website these days) have encouraged usage.

Despite its impressive growth, online retailing still accounts for only 3% of sales of the total grocery sector, making it a niche channel in the broader context. Store-based grocers dominate the sector – Tesco alone generating more than two fifths of total sector sales. Ocado is the odd one out as the only pure-play Internet grocer, capturing 12% of the sector to rub shoulders with the second and third-largest UK food retailers, Asda and Sainsbury’s.

The key stats from the research also highlight:

More than 3.5 million people have tried online supermarkets but would not do it again. Given their proven interest in the channel, this high-potential group needs to be convinced of tangible improvements in service, with perhaps a sweetener to encourage another trial.

12 million people see grocery shopping as a chore. Lucrative pools of cash-rich, time-poor shoppers could be won over by the convenience of online shopping, including functions such as saved favourites and ‘predictive’ shopping lists to make shopping even easier.

Visible special offers and other inspiration online could boost spending among the more than 7 million shoppers who occasionally buy food online and often choose products that look interesting or that are on special offer.

Lots of this insight mirrors my initial sentiments on basic human behaviour and how we prioritise the inherent needs to do certain processes and tasks (making sure what you eat is fundamentally selected and edible).

The other interesting aspect of this kind of migration are people still like the ‘experience’ of shopping, spending their hard earned and interacting with people socially. Retailers scientifically know that if you pop in for a pint of milk you may well end up with a basket of goods, and in some cases a new TV – more so in depressed markets where it may be the only retail therapy you do! We always talk about human science at Dusted and I kind of like the fact that people are people and it’s just really choice and convenience via technology that is changing.

I wonder what I will be writing about on this subject in another 10 years? Or maybe as I dock my mobile device onto the trolley my fully augmented reality Sainsbury’s iPhone app will be audibly telling me what I usually buy on the shelves; pointing it out as I stroll around; prompting me at offers I ‘may’ be interested in that fit my profile; and by the way there’s your on-line social networking buddy Brian whom you’ve never met – he’s near the organic soup!